CaixaBank Profit Up as Bad Loan Provisions Fall--Update

  By  Jeannette Neumann 
 

MADRID--CaixaBank SA (CABK.MC) said Friday that net profit beat analysts' estimates and rose in the second quarter from a year earlier on lower provisions for loan losses.

CaixaBank, Spain's No. 3 bank by market value, said net profit was 365 million euros ($404.38 million) in the second quarter of this year compared with EUR333 million a year earlier. That beat analysts' estimates of EUR317 million, according to a poll by data provider FactSet.

Shares were up around 3% in morning trading in Madrid.

CaixaBank said net interest income in the second quarter fell to EUR1.02 billion from EUR1.13 billion a year earlier.

Net interest income, a key profit driver for retail banks, is the difference between what lenders pay clients for deposits and charge for loans. Analysts had anticipated net interest income of EUR1 billion, according to Factset.

In addition to negative interest rates and the weak demand for loans, which has been a drag on net interest income, CaixaBank and other Spanish lenders have also stopped enforcing clauses in clients' contracts that set a downward limit on how far interest payments could fall. Spanish courts have said the mortgage floors violate consumer protection laws and need to be removed, a further hit to net interest income.

CaixaBank reported a capital ratio in the second quarter of 11.5% under international regulations known as "fully loaded" Basel III criteria, a slight dip from the 11.6% the bank reported in the first quarter.

That figure is "the most negative surprise in the quarter," Citi analyst Stefan Nedialkov wrote in a research report. He had been expecting CaixaBank to report 12%.

Write to Jeannette Neumann at [e-mail]

(END) Dow Jones Newswires

July 29, 2016 03:37 ET (07:37 GMT)

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